No Strings Attached: Indian Regulatory Authority Declares Free, Facebook- Sponsored Mobile Internet a Violation of Net Neutrality Principles

On Monday, the Telecom Regulatory Authority of India (TRAI) enacted a formal regulation prohibiting the imposition of discriminatory tariffs by data service providers.   Although the regulations apply to all Indian telecom service providers, the ruling is widely seen as a response to Facebook’s “Free Basics” program.  This program allows users in developing countries free access to a small number of sites, which provide basic information relating to news, employment, health and education.  Perhaps unsurprisingly, users can also access Facebook.  Websites are optimized to work well with 2G and 3G cellular data connections, which remain the primary means of internet access in India. According to Facebook, the app aims to enrich the lives of its users through free – albeit limited – internet access.   Free Basics facilities a larger project known as, which is a collaboration between Facebook and seven multi-nation corporations engaged in the production of hardware, software and cellular devices.
Critics contend that the Free Basics program has less than altruistic motivations.  The service exercises absolute control over which sites users are allowed to access, thereby placing users in a walled garden.   If a large number of users spend most of their time in a walled garden, business will have to interact with their customers primarily through Facebook rather than setting up their own website.  Critics also contend that by partnering with Facebook, other sites will have to accept Facebook’s terms and conditions.  Other more vehement critics have accused the company of participating in “corporate exploitation masked as philanthropy”. 
Free Basics has faced dedicated opposition from net-neutrality activists as well as India’s technology sector, who fear that by providing free access to Facebook and Facebook approved sites, Free Basics will make their services comparatively unaffordable.   Mahesh Murthy, venture capitalist and start-up consultant accuses Facebook of hypocrisy, writing that if Facebook founder “[Mark] Zuckerburg had been brought up on, he couldn’t have ever built a Facebook.”
The TRAI suspended the Free Basics program in December.  In the wake of this suspension, Facebook launched an aggressive public relations campaign, deploying massive billboards imploring citizens to contact the Authority and voice their support for the Free Basics program.
The Authority’s full decision and reasoning was set forth in a document entitled “Prohibition of Discriminatory Tariffs for Data Services Regulations, 2016” which promulgated rules holding that service providers may not charge tariffs for data services based on the content that the services provide.  In a thorough explanatory memorandum, the agency wrote that “allowing service providers to define the nature of access [through differential pricing for services] would be equivalent to letting TSP’s shape the users’ internet experience.”  The TRAI also noted that differential pricing would allow services providers and other commercial entities to subsidize internet access, creating significant barriers to market entrance and harming completion and innovation.
The TRAI also noted that several “stakeholders” submitted comments linking the internet and its role in preserving the right to free speech and expression under Article 19(1)(a) of the Indian constitution.

Citing precedent by the Indian Supreme court, the Authority wrote that “allowing citizens the benefit of [a] plurality of views and a range of opinions is an essential component of the right to free speech.  This includes the right to express oneself as well as the right to receive information.”

In an attached explanatory memorandum, TRAI explained that this decision follows the agencies broad regulatory principles of “non-discrimination, transparency, non-predatory, non-ambiguous, not anti-competitive and not misleading.”
Other companies have also attempted similar operations.  An Indian start-up called Gigato claims that it will act as a facilitator by allowing app developers to “sponsor” a certain amount of data usage to encourage users to use their particular service.  Although the data will be sponsored by a particular app or service, Gigato believes that it will fall within TRAI’s net neutrality guidelines because users are not bound to use the specific data on any one app or service. Others have suggested that the if the Indian government established internet access as a right, tariffs could subsidize internet access for poor and rural citizens.
While this ruling may be an ideological victory for supporters of net neutrality, it is a connectivity setback for India’s poor.  Recent surveys assessing a wide variety of quality of life metrics show that despite the fact that 35 percent of Indians are illiterate, and only 15 percent are connected to the internet –approximately 71 percent own a cellular device.